This is a huge undertaking and one that we take very seriously, as students use their disbursements to pay for books, supplies and other living expenses.
Many of our students -- 61,000 of whom receive Pell Grants -- rely on the speedy and safe delivery of their student aid to ensure they can pay their bills and continue their education. Without significant modification, the proposed regulation would create unnecessary challenges for us to provide students with their financial aid refunds in a timely, secure manner. While many provisions of the proposed regulation seek to limit fees and tighten security measures, several aspects unfortunately have the opposite effect.
A Move Back to Paper Check
Today, institutions can decide whether to offer paper checks as an option for disbursement among the other options for electronic disbursement. In the event that students do not choose any method for receiving their funds, they will be mailed a paper check. This method has allowed institutions to encourage and promote electronic delivery, which is a more secure and a timely method for students and institutions. Requiring institutions to provide the up-front option of a check goes against decades of encouraging electronic transfer of funds for many consumer purposes, including government benefits and employee earnings.
This will be operationally challenging for our system, and it also would provide a ready market for check cashing services and their exorbitant fees. Again, other provisions of this regulation seek to limit fee exposure to students. Unfortunately, the requirement to provide paper checks up front will expose many students to check cashing fees.
Increased Risk of Financial Aid Fraud
Under the new requirement, colleges would be limited in what information they could share with their third-party disbursement providers. No data, other than a student’s name, address and email, would be permitted -- information that is too vague and opens up exposure to financial aid fraud.
Without the ability to securely authenticate the identity of the student and share additional information, including the amount of a student's disbursement, third parties would have no way to process these transactions with the level of security and accuracy that they do today. We need to find middle ground on this issue, which could be accomplished by giving third-party providers access to refund amounts and unique, nonpersonal student identifiers.
Federalization of the Disbursement Process
Under the proposed regulations, the education secretary is reserving the authority of the department to operate the credit balance disbursement process -- essentially an invitation for unnecessary complication and delay.
Institutions and their students would be required to use the department’s system, whether or not it met the unique needs of a particular college and despite logistical burdens on both institutions and the department. Additionally, any system developed by the department is unlikely to deal with non-Title IV funds, requiring institutions to have redundant systems for the delivery of this aid, which could lead to more delays and errors.
The distribution of financial aid disbursements to our students is a process we take extremely seriously. Students must receive this aid quickly and securely to ensure they can benefit from the education they receive at Ivy Tech and other institutions across the country.
Like the department, we want to protect our students’ financial well-being and provide the least expensive, least burdensome and most financially secure systems. Unfortunately, despite good intentions, the proposed regulation in its current form would be a step in the wrong direction -- a step many students can’t afford to take.
Thomas J. Snyder is president of Ivy Tech Community College, Indiana’s statewide community college system.
Missouri Governor Jay Nixon, a Democrat, announced Saturday that he will veto legislation that would bar students whose parents brought them to the U.S. without legal authority to do so from participating in a state student aid program, The Kansas City Starreported. The legislation “flies in the face of what we believe as Americans and everything we know about the transformative power of education,” Nixon said.
Robert Shireman, who founded the Institute for College Access and Success and engineered the Obama administration's overhaul of student loan programs and increased regulation of for-profit colleges, has found a new home from which to work on higher education issues. The Century Foundation, which has focused its work on higher education on issues related to college access for low-income students, announced Friday that Shireman will become a senior fellow there as Century expands its education and labor policy teams.
Shireman has had a hand in most of the major higher education policy issues of the last decade, through work in Congress (as an aide to the late Senator Paul Simon of Illinois), the White House (as a member of President Clinton's National Economic Council), in the foundation and think tank world (at the Aspen Institute and at TICAS and its Project on Student Debt), and then as deputy under secretary of education in President Obama's first term. More recently, he has worked on college access, funding and community college issues at California Competes, a nonprofit group.
The availability of subsidized federal student loans play a role in increasing tuition, particularly at less-selective private nonprofit colleges with relatively affluent student bodies and for-profit colleges, a study by researchers for the Federal Reserve Bank of New York finds. The study adds to a body of studies -- frequently challenged by higher education leaders and some economists -- suggesting that federal financial aid contributes to tuition increases by easing constraints on students and families.
For today’s enrollment manager, it’s nearly impossible to go a week without someone forwarding an article about another college trying a new way to describe the difference between its listed sticker price, the actual cost of attendance and the institution’s discount rate. The current funding model for higher education is broken and we can only blame ourselves for creating a norm of bargain basement pricing for those families in the know, opaque business models and unexplained annual increases based more on competitors’ current price tag rather than our actual campus needs. We continue to play a game of chicken as we wait for a so-called peer to do what we need to do.
On my own campus, we’ve been discussing this issue for several years and have yet to figure out what, if any, changes we should make, but we do know that honesty is a safe bet.
Gimmicks like so-called tuition resets and freezes, as well as “inflation +” models, are our industry’s desperate attempts to respond to critics and to try to appease the price police, when perhaps we should be discussing why we cost so much instead. These efforts are often undertaken in response to the chorus of calls for affordability, but they seldom illustrate for whom the experience will be more affordable.
Neither these efforts nor simply sticking with the status quo are acceptable over the long term -- families deserve additional information before they pay tuition or incur debt to cover campus costs. But any change has a substantial impact and cannot create spiraling financial scenarios for our campuses, either.
There are significant risks involved in changing how we discuss pricing, cost and value. Private colleges, as tuition-dependent institutions, are hesitant to try something new, especially if all of our peers stick with the currently murky language and approaches to cost and price.
As an industry, we need to work at getting it right for our students, which includes lowering actual costs for students and maintaining sufficient revenue to deliver on our mission. Meanwhile, we are muddling through how we describe our costs, often with too many apologies, and witnessing the shuttering of campuses across the country that didn’t find the right programmatic offerings, words or approaches to make themselves institutions of choice for students.
As best I can tell, there are no clear or easy solutions, but there are a few key elements we need to stress in future rhetoric and approaches:
A clear rationale for a new model. Families would benefit from an honest conversation with college leaders about why unfunded tuition discounting cannot continue at the current rate and why discounting has a negative impact on a college’s short- and long-term finances and bond rating. Further, colleges need to clearly describe their business model to their campus constituents, students and parents of current students and delineate how the annual operation is funded. Finally, leaders need to acknowledge that percentage increases in tuition costs cannot continue in perpetuity. At some point we will price ourselves out of the market and into bankruptcy.
Genuine reductions in cost to students. In too many cases, a clear illustration of exactly what has changed and how much less a student will pay is missing entirely from the launch of a new plan. Some institutions reference averages or scenarios for the financially neediest students while ignoring the middle class. Seldom is there a clear statement that all students will pay at least $XXXX less to attend the next year. I realize this is pretty tricky -- saying that the education offered is less expensive than the previous year -- but this is exactly what’s missing and why many of the efforts so far seem to miss the mark. Without a clear explanation to students and families of the financial benefits of a new model, colleges remain vulnerable to criticism that a new model really doesn’t change the cost of attendance to the student (a criticism that is fair in many cases). Colleges need to clearly articulate whether or not students will benefit.
Substantive changes to the business model and how we operate as institutions. One of the reasons many newly introduced models for calculating costs and how they are applied are viewed as gimmicky is because there is no clear explanation of what (if anything) has changed. Will changes in pricing result in a reduction of departments or student services? Is the college dependent on increasing the size of the student body to make up for lost revenue? Has the college become more efficient? Will the college open a new line of business to generate more revenue? How things will change is the key unanswered question, and our public is smart enough to want to know what changes -- and theoretically reductions -- will occur before they commit.
Sufficient marketing of any new model. While I’ve seen some clever YouTube videos and good press releases, strong marketing of a new model seems pretty limited. Some colleges don’t want to be seen “wasting money” on marketing when trying to prove to the world that they care about reducing costs to students. Additionally, many colleges view new models as highly risky, and they don’t want the hangover of a marketing rollout if it doesn’t work. However, the lack of a confident marketing plan results in most of these efforts being viewed as isolated, gimmicky or done with an ulterior motive, like lowering the price to attract more students because there is excess capacity to educate and house them on campus. An aggressive and comprehensive public relations and marketing campaign would have great benefit to a college if it really does want to transform the model and be a market leader.
Clear connection between price and return. Although there have been recent efforts to describe the return on investment of a college degree, historically speaking, connecting price with results and service has been inadequate at best and incredibly opaque at worst. There are so many questions to consider: What goes into a “comprehensive fee”? How does what a student pays for, and gets, differ from year to year in order to justify an increase or not? Are the services students receive as first-year students more comprehensive than as seniors? Should having a full-time faculty member as an adviser add value and cost? Colleges must do a better job connecting the price of attendance with what a student receives from year to year.
Even if a college committed to addressing these missing pieces, could it transform how we calculate cost of attendance for the student and the institution? I don’t know for certain. But a college that starts out willing to change the business model, reduce the actual price (and cost) for students, clearly describe what a student gets for what he or she pays, and aggressively market a new cost/price model -- that college would get attention. And that would be one of those articles forwarded to me that I would be interested to read.
W. Kent Barnds is executive vice president and vice president of enrollment, communication and planning at Augustana College, in Rock Island, Ill.
Martin O'Malley, the former Maryland governor who is seeking the Democratic presidential nomination, is today releasing a proposal to create debt-free college options in public higher education. O'Malley's plan would take five years to carry out, but immediately he would create new loan refinancing options and limit monthly repayments based on income. Longer term, he would reduce the need for borrowing by calling on states to freeze public tuition rates, while creating new state-federal spending programs to add funds to public college budgets. O'Malley's plan calls for bringing four-year public tuition levels down to 10 percent of median income in a state (5 percent for community colleges). He says that the rates are more than 20 percent of median income in 10 states. Other parts of the plan would increase the value of Pell Grants and support efforts to speed up time to completion.
There are no details in the plan about how it would be financed, but aides told The Washington Post it could be paid by eliminating corporate tax loopholes and increases in the capital gains tax.
The Consumer Financial Protection Bureau on Tuesday released a report describing shortcomings the bureau has found in how student loan servicers treat military borrowers, which include improper denial of legal benefits, negative credit reporting and insufficient follow-through on legal protections for military families.
In 2012 the CFPB released an initial report on the issue. Since then, the bureau said, it has handled 1,300 complaints from military borrowers.
For example, the new report found that service members continue to report difficulties in getting interest rates for their loans capped at 6 percent, as the Servicemember Civil Relief Act requires. It also described how servicers fail to grant active-duty members of the military allowed deferments on loan payments, which can lead to surprise delinquencies, defaults and debt collection efforts.